Herbalife Under Investigation

Herbalife under investigation for pyramid scheme

The Federal Trade Commission to investigate whether Herbalife (HLF) is a pyramid scheme. All Nicole Lopez wanted was a crack at the American dream and a chance to work at home closer to her kids. Instead, she got a nightmare, losing thousands of dollars after trying to sell Herbalife, which makes weight-loss shakes and nutritional supplements.

Earlier Tuesday, the National Consumers League released a letter urging the FTC to take action because the allegations against Herbalife could impact consumers. The group said it had met separately with representatives from Herbalife, Pershing Square and the Direct Selling Association, and concluded that an investigation is the best answer to determine whether Herbalife is a legitimate business or whether it operates a pyramid scheme.

Ackman alleged in December that Herbalife was a pyramid scheme and made a bet the stock would fall, arguing that the company makes most of its money by recruiting new salespeople rather than on the products they sell. Herbalife disputes that.
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“If you’re an honest person and you want to do an honest business, there’s no way you can succeed,” Lopez Herbalife under investigation for pyramid scheme said, sitting in the kitchen of her Utah home.

Unwilling to recruit other people to sell Herbalife, which is how most Herbalife reps make money, she quit after 11 months and lost the $10,000 she invested.

On Wednesday, Herbalife said in a statement “We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife.”

“We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife,” Ackman released in a statement.

“We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.”
After a 10-month investigation into so-called multi-level marketing, CNBC found dozens of people with similar stories. Multi-level marketers sell products through a network of distributors, many of whom work at home and get paid by selling products, as well as recruiting other distributors.

Herbalife maintains that it is a financially strong company that has created meaningful value for shareholders.
Last month Herbalife Ltd. denied a media report that it was the target of a law enforcement investigation. At that time the FTC would not confirm or deny whether any government agency was investigating Herbalife.
“Allegations that Herbalife’s business model is a pyramid scheme are serious charges with serious consequences for consumers and those who are recruited to sell Herbalife’s products,” said Sally Greenberg, executive director at the National Consumers League. “The FTC is the federal agency with the right mandate and expertise to explore these allegations.”

Herbalife under investigation for pyramid scheme Many of the people interviewed discovered that selling the products was harder than they thought. After hitting up family and friends to buy products, sellers often resorted to spending hundreds and even thousands of dollars buying sales leads, which sometimes led nowhere. The real money, they found, is in recruiting others to sell the product, creating what’s known as a “down-line” of distributors. The more distributors they recruit, the more money they are likely to make, based in part on a combination of bonuses and commissions.

The debate has garnered the attention of Wall Street, with hedge fund titans now battling over Herbalife’s stock.

Herbalife shares finished Tuesday down 2.1% at $40.38. Another investor, Dan Loeb of Third Point LLC, has disclosed an 8.2 percent stake in Herbalife, a vote of confidence in the company.
Shares of Herbalife fell 23 cents to $40.15 in premarket trading Wednesday. Its shares have traded in a 52-week range between $24.24 and $73.
CNBC heard claims of thousands of dollars a month — even $10,000, $20,000 and $65,000. One featured speaker, Olga Valencia, a successful distributor, recalled how “my first car was a Mercedes that I bought with Herbalife.”

Herbalife strongly rejects criticism that the company is a pyramid scheme.

34 Responses to "Herbalife Under Investigation"

  1. Sarah le   February 25, 2016 at 5:06 pm

    These didn’t work for me I felt ill using it but I’m now using natural beauty slimming and losing weight! Still got a long way to go but I’m getting there

  2. Steph   June 14, 2014 at 9:01 am

    Mandy is right

    If you were truely educated in health , these products are no better than whats on shelves , they are just over priced , only helping you for your money – like any other product

    Health is always lifestyle changes – healthy diet & exercise balance

  3. Helena   May 30, 2014 at 5:22 pm

    Herbarlife is GOOD product, I am a consumer and I share the goodness of it to people.
    The problem is when you are gready you don’t to work and want big money?,ALL the
    noncern start.

  4. Jessica Bechtold   March 14, 2014 at 5:56 am

    Herbalife is like any other job. You get into it what you put into it. I don’t mean money either I mean time and effort. First of all, its against herbalife’s policies to buy sales leads so anyone not following our standards should have their id # yanked.They tell you to use the products so you feel amazing and get results. That is the only money you have to spend EVER. If you chose to spend on advertising or other things like that, its your choice. I am a stay at home mom of 2 small children. I get to be with them all day while my husband works and then when he is home its time to get to work. I have lost 40lbs by eating herbalife. And now I get to do fit camps, 5weeks to 5k trainings, weight loss challenges, shake samplings & HOM’s. I choose to do these events as a way of helping my community get healthy and as a avenue of getting the herbalife name out in the public.I have to get out in the community and talk to people. If they don’t see me and my results how will they know. I take my kids out for walks and hand out shake sampling invitations. I wear my button showing how much weight I have lost so people ask me about it. I hang flyers in stores. This is MY business and if I am going to work around family events and my children and husband than I have to find time to really work hard or I am not going to make any money. Plus I know the amazing results from these products so I want to share them with everyone. Its amazing how many people are obese in this world and are looking for that one thing that could be their saving grace. I believe we have the best nutritious food out there. Its just in powder and tablet form,

    • gen0music   March 16, 2014 at 5:31 am

      God all these moms in their ponzi schemes… tut tut tut.

  5. vicente   March 13, 2014 at 12:45 pm

    Chris Powell bode shakes are better. http://dreambigypr.vemma.com

  6. Jennifer   March 12, 2014 at 6:39 pm

    90% of what you hear is opinion 10% fact….No one can ever take away my amazing journey with Herbalife. I have lost over 80lbs and am able to be home with my 3 beautiful daughters. I love that I get to help others step into the best version of themselves. We are not the enemy. We build people up and inspire. I love what I do and am grateful that Herbalife found me when I needed it the most. Herbalife is changing lives for the better everyday, I know this because I am one of those lives. Thank you for listening:) ” For things to change you have to change, for things to get better you need to get better” Be the Change!


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